Germany reactivates task force to monitor gas markets as Qatari LNG production stops

Germany has reactivated a taskforce to monitor and respond to potential gas shortages following a halt in liquefied natural gas (LNG) production from Qatar, news agency dpa reported. “We can expect price increases now, but not serious consequences,” said Germany’s economy minister Katherina Reiche at a regional policy conference, according to the article published by Süddeutsche Zeitung (SZ). 

Gas prices skyrocketed on Monday, 2 March, as a result of the expanding conflict in the Middle East following the attack on Iran by Israel and the US. The escalating conflict has led to shipping traffic restrictions in the Strait of Hormuz, through which a large proportion of global oil and gas supplies are transported. 

While the EU does not rely primarily on Qatari LNG, it is likely to feel the indirect effects as supplies to Asia are disrupted, with buyers seeking alternative cargoes and increasing global competition, Euronews reported.

An EU coordination group for monitoring gas supplies and storage and joint crisis responses, is set to meet on 4 March to discuss the impact of the conflict, Reuters reported. The news agency added that the EU's oil coordination group will also meet soon.

Germany’s taskforce is set to monitor the situation in gas markets multiple times per day, and intervene if necessary, Reiche said. The country had introduced an emergency plan for gas in early 2022, as the possibility that Russia, Germany’s main gas supplier at the time, could cut supplies became more tangible. Reiche added that the state would only intervene in the market “when it is absolutely unavoidable”.

Price spikes for gas and other sources of energy in the wake of Russia's invasion of Ukraine had severe consequences for companies and households across Europe. Rising costs for businesses and general inflation linked to higher fuel prices impacted companies and consumers, and Germany in particular faced difficulties to restore reliable economic growth after the energy crisis. 

Carsten Brzeski, economist at ING bank, told news site n-tv he expects oil prices to double in the short term due to the war on Iran. The price of a barrel of oil is likely to climb from 50 dollars in late 2025 to more than 100 dollars, with gas prices expected to follow suit, he said. However, Brzeski added that the situation was less severe than in 2022, thanks to higher diversification of gas supplies.

Filling gas storage facilities across the EU might become problematic if the Strait of Hormuz remains closed for a prolonged period, analysts told Tagesspiegel Background. “By June/July at the latest, gas storage facilities must be filled to a higher level in order to meet the fill level requirements [before winter],” Andreas Schröder, energy analyst at ICIS, told the newsletter.